PG&E To File For Bankruptcy, Look For New CEO

PG&E Corporation PCG was set to open down nearly 50 percent after announcing a leadership change and bankruptcy proceedings.

What Happened

Late Sunday, the board of directors announced the resignation of CEO Geisha Williams and rise of interim CEO John Simon, who served as executive vice president and general counsel for the last two years. Reuters was first to report the news.

"While we are making progress as a company in safety and other areas, the Board recognizes the tremendous challenges PG&E continues to face,” board chairman Richard Kelly said. “We believe John is the right interim leader for the company while we work to identify a new CEO. Our search is focused on extensive operational and safety expertise, and the Board is committed to further change at PG&E."

Then, a Monday press release reported voluntary reorganization in a Chapter 11 bankruptcy proceeding. Management anticipates no interruption of service during the process.

"Following a comprehensive review with the assistance of our outside advisors, the PG&E Board and management team have determined that initiating a Chapter 11 reorganization for both the Utility and PG&E Corporation represents the only viable option to address the Company's responsibilities to its stakeholders,” Kelly said.

Why It’s Important

PG&E recently suffered a series of negative developments, including regulator findings of falsified records and implication in the devastating California wildfires.

In response to demands made by the California Public Utilities Commission, management announced at the beginning of January a board refreshment process and review of strategic options, including an alleged asset sale.

“We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion,” Simon said. “We expect this process also will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure.”

What’s Next

Management targets a Jan. 29 Chapter 11 filing. Based on talks with lenders, PG&E expects $5.5 billion in Debtor-in-Possession financing when it files for relief.

Shares traded at $8.85 at time of publication, down 49.8 percent.

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